ETS 2, the ‘remake’ of CO₂ emission rights

Among the imminent changes to the European Union’s Emissions Trading System (EU ETS), an expansion is on the horizon that will cover critical sectors such as road transport, buildings and industries included in ETS 1 that do not reach the minimum threshold of 20 MW. This expansion, which is scheduled to start in 2027 (with a possible postponement to 2028 in the event of significantly high energy prices), is a milestone in terms of the scope of the emissions allowance market in Europe and the world. A distinguishing feature of ETS2 compared to the EU ETS is the disappearance of free allocation, ushering in a new era in which allowances will be distributed exclusively by auction. The exact number of entities that will be covered remains uncertain, although the European Commission’s initial impact assessment suggests the participation of some 11,400 companies.

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